FTC Fines First Mobile App Developer for COPPA Violation

On Monday, the Federal Trade Commission (FTC) announced that mobile application developer W3 Innovations, LLC (d/b/a Broken Thumbs Apps), has agreed to pay a fine of $50,000 in order to settle charges that it collected and disclosed personal information from children under the age of 13 without first notifying parents of information-collection policies or obtaining verifiable parental consent, in violation of the Children’s Online Privacy Protection Act (COPPA) and the FTC’s COPPA Rule (16 C.F.R. Part 312). This was the first FTC case involving mobile applications, commonly known as "Apps."

COPPA prohibits the unauthorized collection of personal information from children by operators of websites or online services. In particular, the FTC’s COPPA Rule requires parental notice and consent prior to the collection, use or disclosure of personal information of children under the age of 13. In addition, the COPPA Rule requires website operators to post a privacy policy which provides clear, understandable and complete notice of its information collection practices. COPPA applies to online services that are either directed to children under 13 years old, or that knowingly collect personal information from children under 13.

The FTC’s complaint alleged that several of the apps offered for download from Apple, Inc.’s App Store by Broken Thumbs, and its president and owner, Justin Maples, were directed at children under the age of 13. The complaint further alleged that Broken Thumbs collected personal information from children through the online operation of these apps. Among the apps mentioned in the complaint were Emily’s Girl World, Emily’s Dress Up, Emily’s Dress Up & Shop, and Emily’s Runway High Fashion. According to the FTC release, "the Emily apps encouraged children to email ‘Emily’ their comments and submit blogs to ‘Emily’s Blog’ via email, such as ‘shout-outs’ to friends and requests for advice." The complaint alleged that Broken Thumbs had collected over 30,000 email addresses and had “collected, maintained and/or disclosed personal information from over 300 Emily’s Girl World app users and approximately 290 Emily’s Dress Up app users who have registered to submit comments.”

While the FTC had already publically indicated its view that COPPA applies to mobile services, not just Web sites, this is the first enforcement action by the FTC to illustrate that interpretation. The FTC noted that the Broken Thumbs apps “send and receive information over the Internet, and thus are online services directed to children pursuant to COPPA."

As part of the settlement, Broken Thumbs has also agreed to not violate COPPA in the future and to delete all personal information obtained in violation of COPPA.

The challenge presented by COPPA and other privacy laws for App developers is to effectively communicate privacy policies on the small screen and through the download interfaces provided by Apple, Android and other platforms. This challenge may account for the fact that, according to some accounts, almost three quarters of the most popular mobile Apps do not have a privacy policy at all. But the FTC has made clear, through this action and in other public statements, that regardless of the limitations of a small screen, App developers must find ways to comply with the notice and choice rights afforded to consumers under COPPA and other applicable privacy laws.

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